Tata Motors and the Fiat Auto: Joining Forces

Writing Assignment #4, Tata Motors and the Fiat Auto: Joining Forces

Introduction

Tata Motors and Fiat Auto are two of the major players in the Indian automotive market. This paper will begin by discussing the business opportunity in India. The paper will also discuss if Fiat can benefit from acquiring a partner. The paper will also discuss whether Fiat Auto and Tata Motors will make good partners. For every partnership there are advantages and challenges. This paper will discuss the possible challenges that could affect the partnership long term.

What are joint ventures? According to Harrigan, K. (1988), “Joint Ventures are business agreements whereby two or more owners create a separate entity” (p. 142). The author will discuss and evaluate the business case for a joint venture strategy. Lastly, this paper will provide recommendations for the alliance to be successful.

The author will discuss brief history of Tata Motors and Fiat Auto to give a framework of where each company is coming from at the beginning of their agreement to join forces. Prior to the 1990s, Tata Motors manufactured mostly commercial vehicles. They decided to enter the passenger market in the 1990s with the successful launch of the Indica, a small 1400cc diesel engine car which helped them move into the top three passenger manufacturers in India (Cullen, J. B., & Parboteeah, K. P. 2010).

In the earlier 2000s, Tata Motors ran into trouble in the commercial side of their business which resulted in the company reporting an overall loss. Because of this loss, Tata Motors decided they needed to come up with a turnaround strategy to get back in the black. According to Cullen, J. B., & Parboteeah, K. P. (2010), “As part of the turnaround strategy, it improved its internal efficiencies and also decided to focus on overseas markets to reduce the impact to demand fluctuations in the domestic market” (p. 369). By 2003, Tata Motors had returned to...